The NBA salary cap is set to increase by $10.4 million in the 2023-24 season

The NBA expects a significant increase in the salary cap for the 2023/24 season. That increase turned out to be slightly larger than expected, with the league informing teams that the salary cap is expected to increase by $10.4 million in the 2023-24 season.

This season (2022/23), the salary cap is expected to be $123.6 million, but it is expected to increase to $134 million in the new season, giving teams flexibility. At the same time, starting in the 2023-24 season, teams will pay a luxury tax if they exceed $162 million in salaries, compared to the current $150.2 million this year.

What is the salary cap?: Is the amount set by the NBA as a “cap” based on teams’ earnings for their player salary budget. A “cap” that a team can only exceed if they have renewed – or extended – the contract of a player they already had in their roster.

At the same time, if a team exceeds the so-called “tax level” ($150.2 million this year, $162 million starting in the 2023-24 season), for every dollar by which it exceeds the limit, there must also be a dollar as a “tax” to the League, with that amount gradually increasing to $1.50 “tax” per dollar and $1.75 per dollar. This “tax” is distributed as a “reward” to the teams that have not exceeded the salary cap.

This is done to ensure balance and competition in the NBA, as one team in a large market (Lakers, Knicks) and another team in a small market (Thunder) have different earnings.

In a few words: Raising the salary cap gives teams the power and flexibility to offer contracts with less fear of the famous “luxury tax”. But at the same time, there’s always a fear that players’ salaries will skyrocket, so… those taxes get paid anyway.